Reference no: EM132549534
Haigh Ltd produces garden chairs. The budgeted output and sales for the month of April 2020 was 5,000 chairs.
The standard cost is:
Wood 30 sq metres at £4 per sq metre 120.00
Labour 7 hours at £9 per hour 63.00
Variable overheads 7 hours at £5 per hour 35.00
Fixed overheads 7 hours at £10 per hour 70.00
Total production cost 288.00
Standard profit 32.00
Standard selling price 320.00
The actual results were:
Wood 170,000 sq metres at £3.50 per sq metre
Labour 40,000 hours at £10 per hour
Variable overheads £174,000
Fixed overheads £370,000
Sales revenue £1,606,500
Actual production was 5,500 chairs and sales were 5,100 chairs.
Question a. Prepare budgeted reconciliation statement for April 2020, which will show the actual profit for the month.
Question b. Identify the four different types of standards which could be used and the effects the choice of standard would have on the variances calculated